Payable-on-Death Designations (Wills) can be invalidated for Undue Influence.
A payable-on-death (POD) designation (sometimes referred to as “Transfer-on-Death”
(TOD) or a Trotten Trust) is a common form used at financial institutions. Much like the beneficiary form for an IRA, the owner of the account instructs the bank to whom and how much of the funds should be paid. Without a POD designation, a beneficiary may have to wait months to receive the funds as they wend their way through the probate system.
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In November 2015, the First District Court of Appeals ruled that payable-on-death
designation can be invalidated for undue influence. The case, Keul v. Hodges Blvd. Presbyterian Church (40 Fla. L. Weekly D 2619), began simply enough. In 1999, a Husband and Wife executed a family trust and a pour-over will. This is a will written such that upon your death, your property or estate is immediately transferred into a trust.
Very often the trust is created for that purpose. The trust documents stated that if the Husband died first, the entire estate would go to the church after the Wife’s death. Shortly after the trust and wills were executed, the Husband died. A few days before the Wife’s final illness, she signed her bank’s payable-on-death (POD) form stating that if she died the caregiver would receive 75% of the funds. After the Wife died, the bank released the funds, in excess of $300,000.00, to the caregiver. The church filed suit citing undue influence.
The trial court found that the Wife did not lack mental capacity at the time she signed the POD form, but she was suffering from her final illness and her symptoms were worsening (Id. at *3). The trial court found that the caregiver had a fiduciary relationship with the Wife because the caregiver was her “neighbor, friend, paid caregiver, attorney in fact, and health care surrogate.” (Id. at *2). The court found the caregiver violated her fiduciary duty to the Wife, removed the caregiver as the Wife’s personal representative, and invalidated the POD designation.
The caregiver was ordered to return the funds to the estate. The First District Court of Appeals reminded the caregiver that “failure to comply with a court order can justify a finding of civil contempt… including the imposition of interest on the amounts unpaid, as well as fines, costs, attorney’s fees as sanctions for noncompliance… and allows incarceration of a party who has intentionally divested herself of the ability to pay, after compliance with due process requirements of the Rules of Criminal Procedure” (Id. at *10).
Drafting end-of-life documents can be more complicated than drafting a simple will. Speaking to a lawyer can provide you, and your beneficiaries, with confidence that your wishes will be followed. For assistance in drafting your end of life documents, such as your will, please contact the attorneys at Fletcher & Phillips at 904-353-7733.